Raghuram Rajan slams ‘venal’ politicians

"The tolerance for the venal politician is because he is the crutch that helps the poor and underprivileged navigate a system that gives them so little access," Rajan said.

MUMBAI: Reserve Bank of India (RBI) Governor Raghuram Rajan has once again torn into "venal politicians" and "crony capitalists," calling them a drag on the economy because they curtail opportunities for citizens, impair economic growth and weaken the country's democratic fabric.

In unusually strong comments on the political class from a serving central bank chief, Rajan, for the second time this week, on Wednesday sought to put the spotlight on the sclerosis in Indian society by saying inaccessible public services for the poor had created a fertile ground for crooked politicians to exploit the situation to their advantage.

"The tolerance for the venal politician is because he is the crutch that helps the poor and underprivileged navigate a system that gives them so little access. This may be why he survives," Rajan told an audience in Mumbai.

"In a number of states, ration shops do not supply what is due, teachers do not show up at schools to teach; the police do not register crimes, or encroachments, especially if committed by the rich and powerful.... Public hospitals are not adequately staffed and ostensibly free medicines are not available at the dispensary... I can go on, but you know the all-too-familiar picture. This is where the crooked but savvy politician fits in."

An internationally celebrated economist before he took charge as RBI governor, Rajan's plainspeak is uncommon coming from a serving central bank chief and more so because it comes at a time Parliament is in session. Predictably, his utterances have created a flutter in industry and media circles.

A big votary of reform, Rajan has been championing financial inclusion and direct benefit transfers to reduce corruption in the system and ensure that benefits doled out by the government reach the poor.

Corrupt politicians were not the only targets of Rajan's criticism as he took on so-called crony capitalists too. "By killing transparency and competition, crony capitalism is harmful to free enterprise, opportunity, and economic growth," he said, adding: "And by substituting special interests for the public interest, it is harmful to democratic expression. If there is some truth to these perceptions of crony capitalism, a natural question is why people tolerate it. Why do they vote for the venal politician who perpetuates it?"

Rajan said corrupt politicians made an already dysfunctional system worse. "While the poor do not have the money to purchase public services that are their right, they have a vote that the politician wants," he said.